Game industry survey finds layoffs and rising hardware prices deepen crisis

The video game business entered 2026 with a deep split between the strength of its releases and the weakness of its economics. In a survey of more than 2,300 game industry professionals, 28% said they had been laid off in the past two years, 33% of U.S. respondents reported a layoff, and half said their current or most recent employer had cut jobs in the past 12 months. At AAA studios, two-thirds of respondents said their companies had layoffs.

The numbers point to an industry where instability has become routine rather than exceptional. The survey, which also expanded this year to include educators and students, captured a wider sense of anxiety around the future pipeline of game talent. For studios, the message is blunt: even the biggest productions are not insulated from churn, and the pressure is reaching beyond development floors into classrooms and training programs that feed the business.

At the same time, the console market has become more expensive for consumers. Sony raised U.S. PlayStation 5 prices effective August 21, 2025, setting the standard console at $549.99, the Digital Edition at $499.99 and the PS5 Pro at $749.99. Nintendo also opened its next hardware cycle at a premium, launching Switch 2 in the United States on June 5, 2025 at $449.99, with a Mario Kart World bundle priced at $499.99.

That pricing did not stop U.S. spending from growing, but it did not erase the strain either. Consumer spending on video games reached $60.7 billion in 2025, the second-highest level on record and up 1.4% from 2024, according to the Entertainment Software Association. Hardware sales rose 9% to $5.4 billion, while subscription spending climbed 20%. The market is still spending, but the gains are being driven in part by a more expensive hardware cycle and recurring services that keep consumers locked in.

The strain is also visible inside Microsoft, which has made gaming a visible part of its broader corporate reset. In its FY26 second-quarter results, the company said revenue in More Personal Computing fell because of Gaming, and operating expenses increased partly because of impairment charges in the gaming business. Microsoft also confirmed more than 9,000 layoffs in July 2025, including cuts affecting Xbox, underscoring how even the largest platform holders are shrinking parts of their gaming operations while continuing to invest heavily elsewhere, especially in AI.